Viewpoint: My Dream Legislation: We Should All Get To See What Medicare Pays
"Imagine going to a grocery store and being charged $5 for a half gallon of milk and then finding out that the person ahead of you in line is being charged $1 for half a gallon of the same brand of milk.
I’ve often called our nation’s approach to Federal policy “ban and mandate,” because many people seem to believe in structuring our world and righting our wrongs with bans and mandates as primary incentives and disincentives in our lives. I don’t – I think we have far too many of them. However, I do have my own fantasy mandate, and it’s not too much to ask, as it pertains to something we are coerced to pay for. As taxpayers/workers, we fund Medicare A and C (here is a good description of the basic structure of Medicare). The Medicare tax is taken out of our wages/salary at 2.9% of our pay (and at a higher rate if you earn over $200K). I think we all deserve to see what the Medicare prices are for the medical service(s) we receive, when we receive them from a hospital/medical facility that participates in Medicare. Software is already in place that attaches fees to the billing codes that are used (CPT codes for outpatient services and DRG codes for inpatient services). It would be fairly easy to crank out the Medicare prices for the billed codes right along with whatever is being charged, and also for price estimates. After all, if we are not on Medicare, we may be charged much more than the Medicare price. Imagine going to a grocery store and being charged $5 for a half gallon of milk (with this same high price at other local grocery stores) and then finding out that the person ahead of you in line is being charged $1 for half a gallon of the same brand of milk. You would not be happy with the unequal treatment, and if you were struggling to afford groceries, would likely be very upset. In a previous article, I told a personal story of being charged much more than the Medicare fee (which you can read here). Being charged a lot more than the Medicare fee is a very common experience, but patients are often not aware of it because this information is not available to them.
One of the obstacles to receiving this information is the American Medical Association (AMA). While only a small percentage of physicians are paying members of the AMA, membership fees in 2022 totaled $33.8 million (page 17), which is only about 11% of the AMA’s revenue. The AMA gets a large portion of their revenue from the CPT coding scheme, and “Although its use has become federally regulated, the CPT’s copyright has not entered the public domain. Users of the CPT code set must pay license fees to the AMA.”
From the article by Anne Paddock on her site, Paddock Post: “The AMA raises about $300 million annually… By far, the largest source of income is from royalties which are primarily the fees paid by doctors, groups, hospitals, insurance companies, and the government to use the CPT Coding System, a classification system established by the AMA for classifying medical, surgical, and diagnostic services.”
The royalties paid by the Federal government and others to the AMA are a relatively small percent of the enormous amount paid by the Federal government for Medicare, and yet this exclusive deal made between the AMA and the Centers for Medicare and Medicaid Services (formerly HCFA) back in 1983 prevents us from easily finding out what Medicare (and the patient and/or their supplement) are paying for a medical service in our region. If you go to the Medicare Physician Fee Schedule (MPFS) for your region (via the local Medicare Administrative Contractor, which is Noridian in Montana) to look up codes that are on your bill, you will encounter an intimidating warning banner, but you can read the banner without proceeding further. This means that you are not allowed to read the Medicare fee schedule without a license, and if you do read it, you consent to “monitoring”.
With the AMA’s lucrative and exclusive contract with CMS, I think the Medicare price for the billed and estimated codes should be routinely included with every single bill from a Medicare-participating provider and on every single good faith estimate. You may ask what good would that do, aside from upsetting people. My answer is that I think it is essential to have access to this information that is otherwise very difficult or even illegal to obtain. The AMA can still collect their royalties on their exclusive deal, as this would only be for the specific billed or estimated codes. As taxpayers we are paying for Medicare, so I think we have a right to this information. It can help us as voters, and employees to better understand the system. Finally, it can help us self-pay patients (an increasing segment of the population) to negotiate a reasonable price, even though it will still likely be higher than the Medicare price. If a hospital or medical facility does not participate with Medicare (although almost all hospitals do), they shouldn’t have to provide it. It would be one of the simplest and shortest laws, if it was put forward all by itself (as it should be). There is no GOOD reason to oppose sharing this information, although insurance companies and hospitals would likely oppose it. A little sunlight (information) would not hurt the patients/customers of this obscure and often mafia-like industry, where government and commercial interests often collude, keeping patients in the dark and frustrated.
Healthcare Viewpoints is a monthly series featuring original columns from Montana healthcare leaders focused on addressing the challenges presented by our broken healthcare system. The opinions of guest authors do not necessarily represent the policy positions of the Frontier Institute.